Global Net Lease, Inc. · NYSE:GNL
Global Net Lease — Merger or Acquisition (May 2023)
29 slides from Global Net Lease's merger presentation, May 24, 2023
Slide 1: Global Net Lease to Merge with The Necessity Retail REIT
Global Net Lease to Merge with The Necessity Retail REIT Internalize Management Enhances Corporate Governance May 23, 2023 Pictured – McLaren Campus in Woking, U.K.
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS 1 The statements in this presentation that are not historical facts may be forward - looking statements. These forward - looking statements involve risks and uncertainties that could cause actual results or events to be materially different. In addition, words such as “may
Slide 3: Projections
P R OJECTIONS 2 This presentation also includes estimated projections of future operating results. These projections are not prepared in accordance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and present
Slide 4: Additional Information and Where to Find It
ADDITIONAL INFORMATION AND WHERE TO FIND IT 3 In connection with the proposed Merger and Internalization and the related proposed transactions, GNL intends to file with the SEC a registration statement on Form S - 4, which will include a document that serves as a prospectus of GNL and a joint proxy
Slide 5: Strategic Rationale and Benefits of Merger and Internalization
STRATEGIC RATIONALE AND BENEFITS OF MERGER AND INTERNALIZATION Sector Leading Diversified Net Lease REIT • Considerably increases size, scale, and prominence of Global Net Lease, Inc. (“GNL”) with $9.6 billion of real estate assets on a combined company basis (1)(5) • Global Net Lease, Inc. post - c
Slide 6: Transaction Details
Transaction Details (2)(3) • All stock merger between GNL and RTL, with GNL Post - closing as the surviving entity (the “Merger”) • RTL stockholders will receive 0.670 shares of GNL for each common share of RTL, representing a total consideration of $7.08 per share and a 35% premium to RTL’s 30 - da
Slide 7: Benefits of Internalization
GNL and RTL are internalizing management in conjunction with the Merger. GNL Post - closing expected to realize significant costs savings and potential trading multiple expansion Benefits of Internalization (1) • Approximately $54mm cost efficiency created from elimination of all management fees, su
Slide 8: Estimated Annual Savings
Category Estimated Annual Savings Description Internalization Savings Approximately $54 million immediate at transaction close (2) • Elimination of asset management fees, property management fees, incentive fees, equity issuance fees, and reimbursable expenses net of internalized employee compensati
Slide 9: Key Metrics Made Even Stronger Through Combination
KEY METRICS MADE EVEN STRONGER THROUGH COMBINATION Note: Balance sheet and portfolio metrics as of March 31, 2023, unless otherwise noted. 1. Please see Disclaimers at the front of this presentation for important information regarding as adjusted figures giving effect to the Merger and the Internali
Slide 10: Sector Leading Diversified Net Lease REIT
$44,128 $18, 9 00 $4,607 SECTOR LEADING DIVERSIFIED NET LEASE REIT Gross Book Value of Real Estate ($ in millions) Source: Company filings. Note: Balance sheets as of March 31, 2023, unless otherwise noted. 1. Please see Disclaimers at the front of this presentation for important information regardi
Slide 11: Third Largest Net Lease REIT with a Global Presence
FL GA AL MS LA TX NM AZ CA NV UT OR WA ID MT WY CO ND SD NE KS OK AR MO IA MN WI MI IL IN OH KY TN NC SC VA WV PA NY VT ME NJ DE MD DC NH MA RI CT PACIFIC SOUTHW E ST SOUTHWEST MID - ATLAN T I C NEW BRU NSW ICK NB PACIFIC N ORT H WE ST SOU TH EAST AK NORTHEAST THIRD LARGEST NET LEASE REIT WITH A GLO
Slide 12: Benefits of Scale – Larger REITs Trade at Higher Multiples
1 6 .9x 1 6 .6x 1 5 .4x 1 5 .2x 1 5 .0x 1 4 .9x 1 4 .8x 1 3 .2x 1 2 .9x 1 1 .3x 1 1 .0x 5. 3 x Average: 14.3x Average: 6.0x 6.8x 83% 81% 79% 79% 77% 76% 74% 74% 68% 67% 66% 104% 96% 84% Average: 75% 5% 5% 6% 7% 5% 5% 7% 4% 5% 5% 4% 15% 18% 13% REITs with scale trade at higher AFFO multiples, have mo
Slide 13: Diversified and Stable Tenant Base
Single - Tenant Industrial / Distribution 31% Single - Tenant Retail 22% Single - Tenant Office 20% Multi - Tenant Retail 27% Total Portfolio Annualized SLR by Segment Post - closing Industry Exposure (1)(3) Post - closing Credit Rating (1)(2)(3) Post - closing Asset Diversification (3) Note: Portfo
Slide 14: Diversified and Stable Tenant Base (Cont'd)
DIVERSIFIED AND STABLE TENANT BASE (CONT’D) Note: Portfolio metrics as of March 31, 2023, unless otherwise noted. Ratings information is as of March 31, 2023. *Represents Moody’s Implied Rating. ** Represents Tenant Parent Rating even if not a guarantor on the lease. 1. 2. Metric based on annualized
Slide 15: Diversified and Stable Tenant Base (Cont'd)
17% 19% 19% 19% 22% 27% 29% 32% 32% 33% 38% 51% 74% 75% DIVERSIFIED AND STABLE TENANT BASE (CONT’D) Top 10 Tenants Percentage of Total SLR (1)(2) Source: Company filings, company websites, FactSet, S&P Global. Note: Portfolios metrics as of March 31, 2023, unless otherwise noted. 1. 2. 3. Please see
Slide 16: GNL Post-Closing Capitalization
Plan to maintain conservative financial and credit policies and expect to further de - lever the balance sheet through operating expense savings, potential non - core asset sales, organic NOI growth, and dividend policy revision Operating expense savings from Merger and Internalization to reduce lev
Slide 17: Leadership Overview
LEADERSHIP OVERVIEW Board of Directors Management Michael Weil , Director Refer to “Management” section for Michael Weil’s biography Michael Weil , Co - Chief Executive Officer Currently CEO of RTL Previously served as Senior VP of sales and leasing for American Financial Realty Trust Served as pres
Slide 18: Governance Update
Opt out of the classified board provision of the Maryland Unsolicited Takeovers Act (“MUTA”) Declassify its Board of Directors, so that seven of the nine directors would stand for election to annual terms at the 2024 annual meeting of stockholders, and all nine directors would stand for election to
Slide 19: Key Takeaways
KEY TAKEAWAYS 18 Stockholders in GNL Post - closing expected to realize value through an enhanced portfolio, increased diversification, and substantial cost savings (1) +9% accretive relative to GNL’s Q1’23 AFFO per share on an annualized basis (2)(3) Substantial immediate and longer - term cost sav
Slide 20: Financial Definitions
FINANCIAL DEFINITIONS 19 Non - GAAP Financial Measures This section discusses non - GAAP financial measures we use to evaluate our performance, including Funds from Operations (“FFO”), Core Funds from Operations (“Core FFO”), Adjusted Funds from Operations (“AFFO”), Adjusted Earnings before Interest
Slide 21: Financial Definitions – Caution on Use of Non-GAAP Measures
FINANCIAL DEFINITIONS 20 Caution on Use of Non - GAAP Measures (cont’d) We consider FFO, Core FFO and AFFO useful indicators of our performance. Because FFO, Core FFO and AFFO calculations exclude such factors as depreciation and amortization of real estate assets and gain or loss from sales of oper
Slide 22: Financial Definitions – Funds from Operations
FINANCIAL DEFINITIONS 21 Funds from Operations, Core Funds from Operations and Adjusted Funds from Operations (Cont’d) Funds From Operations (Cont’d) Due to certain unique operating characteristics of real estate companies, as discussed below, NAREIT, an industry trade group, has promulgated a measu
Slide 23: Financial Definitions – Core Funds from Operations
FINANCIAL DEFINITIONS 22 Funds from Operations, Core Funds from Operations and Adjusted Funds from Operations (Cont’d) Core Funds From Operations In calculating Core FFO, we start with FFO, then we exclude certain non - core items such as acquisition, transaction and other costs, as well as certain
Slide 24: Financial Definitions – Adjusted Funds from Operations
FINANCIAL DEFINITIONS 23 Funds from Operations, Core Funds from Operations and Adjusted Funds from Operations (Cont’d) Adjusted Funds From Operations (cont’d) In calculating AFFO, we exclude certain expenses which under GAAP are characterized as operating expenses in determining operating net income
Slide 25: Financial Definitions – Adjusted EBITDA and NOI
FINANCIAL DEFINITIONS 24 Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, Net Operating Income, Cash Net Operating Income, and Constant Currency. We believe that Adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization adjusted for a
Slide 26: Financial Definitions – NOI (Cont'd)
FINANCIAL DEFINITIONS 25 Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, Net Operating Income, Cash Net Operating Income, and Constant Currency. (Cont’d) NOI is a non - GAAP financial measure equal to net income (loss), the most directly comparable GAAP financial measure, le
Slide 27: Financial Definitions – Cash Paid for Interest and Constant Currency
FINANCIAL DEFINITIONS 26 Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, Net Operating Income, Cash Net Operating Income, and Constant Currency. (Cont’d) Cash Paid for Interest is calculated based on the interest expense less non - cash portion of interest expense and amorti
Slide 28: Non-GAAP Reconciliations
NON – GAAP RECONCILIATIONS (Amounts in thousands) Three Months Ended March 31, 2023 March 31, 2022 EBITDA: Net loss $ (890) $ 1 0,541 Depreciation and amortization 3 7 ,029 3 9 ,889 Interest expense 2 6 ,965 2 4 ,123 Income tax expense 2,7 0 7 3,0 9 5 EBITDA 6 5,8 11 7 7,6 48 Impairment charges – 23
Slide 29: Non-GAAP Reconciliations
NON – GAAP RECONCILIATIONS (Amounts in thousands) Three Months Ended March 31, 2023 March 31, 2022 Funds from operations (FFO): Net (loss) income at t ribut a bl e to comm o n stockho l de r s (in a ccorda nc e w i th GAAP) $ (5,98 9 ) $ 5,4 8 3 Impairment charges – 230 De pr eciat io n an d a m ort